when builder not collected service tax from the client and can he say collected amount from client is inclusive of service tax ?

[RameshBabu Kari]

when builder is charging the amount for the sale of apartment and service tax is not charging from client and charging the amount as per the amount mentioned in agreement in accordance with the govt norms but no service tax is collecting and can we show such collection amount is inclusive of service tax ? can we show the such service tax amount as collected and remitting to the department ?

[KASTURI SETHI]

Assuming that payment has been collected from the client by the builder prior to the completion certificate or occupation of the house, and thus the element of service is present. Builder has provided construction service in addition to the "sale". Under Section 67 (2) of the Finance Act, such collected amount is to be treated inclusive of Service Tax. This is cum-tax value. Service Tax has to be deposited. ST has to be computed by going backward from the gross amount charged.

[Himansu Sekhar]

It will be a cum tax value. But care should be taken that the assessee does not collect any tax afterwards from the customers.

AI Summary

Service tax inclusion: payments before completion certificate treated as inclusive, requiring backward computation and deposit. If payments for an apartment were collected before the completion certificate and construction service is present, the gross amount is to be treated as a cum-tax value under Section 67(2) and service tax must be computed by reversing the tax from the charged amount and deposited; the assessee must not later collect tax again from customers.